Finance Minister Nirmala Sitharaman presented the Union Budget 2026 on February 1, bringing several key clarifications for taxpayers. While the budget did not introduce any major new tax deductions or rebates, it focused on making compliance easier and providing extended timelines for filing returns.

Extended ITR Deadlines for Individuals and Non-Audit Cases

One of the most important announcements for taxpayers was the extension of deadlines for filing income tax returns. Individuals using ITR-1 or ITR-2 forms can now file their returns up to July 31, 2026, providing them ample time to complete documentation and avoid last-minute stress.

For non-audit businesses, trusts, and other entities not subject to mandatory audits, the government has extended the return filing deadline to August 31, 2026. This extension aims to give small businesses and organizations sufficient time to handle accounting and reporting requirements without undue pressure.

Revised Returns Deadline Extended to March 31

Another major change concerns revised returns. Earlier, taxpayers had until December 31 to submit a revised ITR at no cost. Budget 2026 extends this window to March 31, 2027, though a nominal fee will apply for filing revised returns. This measure is expected to help taxpayers correct minor mistakes—such as missed deductions or computational errors—without facing heavy penalties or delays in refunds.

New Income Tax Act 2025 to Take Effect from April 1

Finance Minister Sitharaman also confirmed that the Income Tax Act, 2025 will come into force from April 1, 2026. The new law aims to simplify tax procedures, introduce easier forms, and streamline compliance for all taxpayers. Officials believe that the updated ITR forms will make filing smoother and reduce the complexity that often confuses salaried individuals and small taxpayers.

TCS and TDS Changes for Specific Transactions

The budget also included changes to transaction reporting under TCS (Tax Collected at Source) and TDS (Tax Deducted at Source):

• TCS on foreign tour programs has been reduced, making international travel for education and medical purposes more affordable. Under the Liberalized Remittance Scheme (LRS), taxpayers can remit funds abroad at a TCS rate of 2%.

• Manpower supply services will now fall under TDS provisions for contractor payments, ensuring better compliance and monitoring.

• A one-time foreign asset disclosure scheme will allow certain taxpayers to declare overseas assets within a specified limit without penalties. This scheme targets specific categories of taxpayers who previously did not report foreign holdings.

Focus on Simplifying Compliance

While Budget 2026 did not alter tax slabs or introduce new deductions for salaried taxpayers, it emphasizes ease of compliance. The government’s goal is to provide clarity, reduce confusion, and encourage timely filing of returns. By setting firm deadlines and introducing simpler forms, taxpayers—especially those filing individual returns—can plan their finances better and avoid last-minute rushes.

Takeaway for Taxpayers

• Individuals using ITR-1 or ITR-2: File by July 31, 2026

• Non-audit businesses and trusts: File by August 31, 2026

• Revised returns: File by March 31, 2027, with a small fee

• New IT Act: Effective from April 1, 2026, bringing simpler compliance and updated forms

Experts believe these measures will reduce the compliance burden, increase transparency, and make the tax process more predictable for salaried individuals, small businesses, and trusts alike.

By clarifying timelines and simplifying return procedures, the government aims to make tax filing less stressful while maintaining accountability and financial discipline across all segments of taxpayers.